Managing personal tax is complicated if you don’t know what you are doing. However, with the help of this Personal Tax Guide in the UK, you can handle the self-assessment tax return process easy and free of stress. This guide will inform you on how to do your self-assessment tax return, when to do it, penalties, and deadlines to make the best out of your money.



What is Self-Assessment Tax?

Self-assessment tax is the process of calculating a person’s own taxable income and liabilities. In the UK, this is a system that HM Revenue and Customs use to collect taxes and is relevant to any self-employed entrepreneurs or people with other types of untaxed incomes. 

Calculation of self-assessment tax return is done by subtracting all available tax credits such as advanced tax, credit, TCS, TDS, MAT/AMT, and other reliefs under 87A/90/90A/91. This provides fairness, equity, certainty, and simplicity to the taxpayer and gives a greater responsibility to them to assess their tax refund or debit.



Who needs to fill in a Self-Assessment tax return?

The completion of a self-assessment tax return is necessary if you fall into one of the categories below in the last tax year (April 6th to April 5th next year). 

  • Self-employed entrepreneurs – If you are self-employed as a sole trader and earned more than £1,000 before deducing anything, you can claim tax relief.
  • A partner in a business partnership

The tax return is not necessary if the only income you have is your wages or your pension. But if you have any other untaxed incomes, you will need to send a self-assessment tax return, this includes,

  • Money earned from renting out properties
  • Money earned by tips and commissions
  • Income from savings, investments and dividends
  • Money made from foreign incomes

Other than the categories mentioned above, there are other reasons to send out a tax return.

  • To prove that you are self-employed – This can help to claim Tax-Free Childcare or the maternity allowance. If you receive the child benefit and your or your partner’s income is over £50,000, you will need to send a tax return and pay the high-income child benefit charge.
  • To claim some tax reliefs.



How do I file for a Self-Assessment tax return?

When filing for a Self-Assessment tax return, there are 2 ways to go about it. You can use the, 

  1. Online method.
  2. Paper method. 

Both present unique benefits, and both got some disadvantages. Let’s get into more details about each one and find out the best-suited way for you.



How do I file an online tax return?

The first thing you need to do to complete an online tax return is to register on HMRC website. On the HMRC website, Select the “Self-Assessment” option under the ‘Do it online’ heading. After that, the process is simple. Here, in this personal tax guide in the UK, we have included what you need to know about the registration process.

Simply visit the HMRC website and select the option that applies to you. Then, you will receive a Unique Taxpayer Reference (UTR) number by mail. This will contain details on how to create a Government Gateway Account. After that, HMRC will send an activation code by post. Use this code promptly to create the account as this code expires in a short period of time. 

Once all those steps are over, you can log in and submit your self-assessment tax return. 



How to fill in an online tax return?

  • Get your documents together – This includes your bank statements, student loan statements, P60 form, and any business accounts. 
  • Check your details – Double-check the details because inaccurate information might result in a penalty. 
  • Fill in the relevant sections – Fill out the sections which apply to your case only. 
  • Check your return – Make sure you provide accurate details. If you haven’t confirmed your figures yet, provide estimates and amend them later. 
  • Submit your return – Keep the confirmation code that shows up on the screen after the submission safe for future references.



Pros & Cons of Online tax return

Pros

  • Extended deadline – You have until January 31st to file your online tax return, while the paper tax return deadline is by October 31st.
  • Faster Confirmation – After the completion of your online tax return, you will receive instant confirmation from HMRC. 
  • Faster calculations – Your tax is calculated automatically when submitting your tax refund online. So, the online process is very quick. 
  • Personalized tax forms – Only the forms which are suitable to your selected category will be shown here. 
  • To avoid mistakes – Common mistakes are usually highlighted by the HMRC software. 
  • Save your progress – The submission progress can be saved and resumed at a later time.



Cons

  • Technical limitations – Not everyone has the necessary technical knowledge and technical facilities to complete an online tax return.  
  • No Physical Proof – With the online method, you will not be able to get physical proof of the submitted documents.
  • Risk of data loss issues – Loss of data can occur because the hardware and software could malfunction.



How do I file for a paper return?

The other way of doing the tax return is by filling a paper tax return. This comprehensive personal tax guide in the UK will show you how to complete your paper tax return in simple steps.



Where can I get the forms for self-assessment tax? 

To get the paper tax return forms, you must first inform HMRC about why you are unable to file an online tax return. When HMRC identifies that you cannot file online, they will send out paper tax return forms.



How do I fill the paper tax return forms for self-assessment tax?

It is always a good idea to gather all the documents you need before getting into filling self-assessment tax return papers. 

Don’t wait till the last minute to complete the tax forms, as sometimes there are cases where you need extra forms and additional information from the authorities. 

Organize your paperwork and keep proof of your postage as well as copies of all the necessary documents that you attach to the paper tax return form. You should keep in mind to include all the other incomes like savings, interests, etc.



Sections of the main tax return (SA100)

Completing the main tax return form can be a bit confusing. So, in this UK tax guide, we share how to complete the form accurately, page-to-page.

  • Page 1 – Personal details such as name, contact number, and date of birth goes on this page. 
  • Page 2 – This page contains a summary of the types of income for the given year. Tick the box that matches your circumstances and read the instructions to find which supplementary pages are applicable for you. 
  • Page 3 – List your other sources of income, such as income from savings, investments, and pensions. 
  • Page 4-5 – List the tax relief forms that are available to you. This page can include factors such as marriage allowances and gift and aid payments. Any child benefits that you claim fall under the high-income benefit Charge section. 
  • Page 6 – Mention any tax refunds that you have done previously here. You can select to have the underpaid taxes collected from wages or pension as well. Also, here you can provide a bank account for any tax refunds. 
  • Page 7 – If you have a tax adviser, share their details and other important information here.
  • Page 8 – Sign the tax return and inform whether you are enclosing supplementary pages.



Other sources of income

There are various types of income that a person can earn. Among these, the below mentioned goes on page 3 of the self-assessment tax return paper. 

  • Pension contributions 
  • Charitable donations 
  • Blind Person’s Allowance 
  • Student loan repayments 
  • High-income Child Benefit charge
  • Marriage Allowance



Pros & Cons of paper tax return

Pros

  • Security – Paper tax returns can be safer because they do not require sharing personal information on the internet.  
  • Easy to use – Users are less likely to face any technical limitations while filling out paper forms.
  • More familiar – Filling out paper forms can be more familiar and easier to people than using the digital method.



Cons

  • Earlier deadline – The deadline for a paper tax return is set to October 31st. This is much earlier than the due date of the online tax return method.
  • Longer processing time – As this method uses post and other slower methods of processing, this could take more time than the online method. 
  • Easier to make mistakes – Spelling errors and math errors can be easily made and cannot be corrected if missed by the taxpayer.



What are Supplementary pages of a Self-Assessment tax return?

Supplementary pages provide a convenient and easy way to attach extra pages to your tax return paper. Unlike file attachments, supplementary pages act as a continuous part of the document. This helps to keep the flow of the document and makes it clearer. 



Paper tax return supplementary pages.

Declaring extra means of income that you haven’t paid tax for and stating them are the functionality of supplementary pages in a tax return. These help the HMRC to clarify the tax return and get a better idea about all of your means of income. Attach the below-mentioned types of supplementary pages to the paper self-assessment tax return form, depending on your case.

  • Self-employment (SA103S or SA103F)

Income – State your income if you are earning money through a self-employment method. All the earnings you made with self-employment before deducing the expenses go here. Also, include other income earnings like self-employed income support grants (especially in this pandemic time). 

Expenses – When listing expenses, there are 2 ways to do it. Listing without itemization is suitable if your annual turnover is below £85,000. But if not, it is compulsory to mention all of your expenses individually with the total at the end.

  • UK property (SA105) 

Income – Mention earnings from all the furnished holiday lettings on this page. If you have any furnished holiday lettings outside the UK and in European economic areas, you will have to enter those values on a separate page. Use the second section when entering total income earned from rent and other properties. 

Expenses – Attach this form to the self-assessment tax return papers if you gain money for any property rentals. This includes any list insurance money and ground rent, repair and maintenance costs, and financial costs. However, legal, management, or any other professional fees are the most common expenses that come under this category. You will not be able to claim expenses if you claim the 1,000 tax-free trading allowance.

  • Capital gains (SA108)

Income – Here, list any incomes that you need to declare capital gains tax. These are called disposal proceeds. You have to fill a separate form for residential properties, non-residential properties, and shares and securities. 

Expenses – You can claim for allowable costs on a capital gain tax return. Under Allowable Costs, the amount spent on buying the asset, improvement costs, and other expenditures are usually included. Keeping records could help avoid claiming the same asset twice, which you might have claimed in a previous year.



Other supplementary pages

  • Additional information (SA101)

This section is for less common income types. Money earned by insurance gains, married couple allowance, and gilt-edged security comes under this page.

  • Employment (SA102)

Employees who are working for an employer who dedicates tax through PAYE or received an income as a company director fall under this category. List here if there are any incomes earned as a treasurer or a chairperson and also earnings by working through a company partnership. If you received a foreign income from a job, office, or directorship, that too is relevant to employment supplementary pages.

  • Partnership (SA104S or SA104F)

If you are involved in a business partnership, you need to fill out this supplementary page. You can use the HMRC as a reference to find whether you need a short form or a full form.

  • Foreign income (SA106)

This includes interest from offshore savings accounts, dividends from foreign companies, and income from properties overseas. If you are getting a foreign pension, that too must be on this supplementary page. Use the foreign income page to claim foreign tax credit relief or special withholding tax.

  • Trusts etc (SA107)

Fill this out if you have received or were qualified to an income from a trust or a settlement (excluding bare trusts). This is also valid if you receive income from an estate of a person who died.

  • Minister of Religion (SA102M)

This page is for anyone who is recognized as a minister of religion. He or she can be a minister of religion of any faith and any denomination.

  • Lloyd’s underwriters (SA103L)

Underwriting Members of Lloyd’s who make trades and receive CTA 1 and CTA 2 forms from Lloyd’s should fill this segment. If you are eligible, include only the income from the personal funds held at Lloyd’s.



How to pay my Self-Assessment tax bill?

After completing and submitting the self-assessment tax return as stated in this personal tax guide in the UK, you will receive the tax bill showcasing the tax amount that you should pay. If you are self-employed, this changes into National Insurance contributions.



When do I pay the tax due?

Self-Assessment tax return payments are usually due on January 31st following the end of the tax year. So, paying the tax bill before the deadline is always a wise choice.



What payment options are there?

When it comes to paying the self-assessment tax return bill, you can pay it in instalments. But keep in mind that these become advances on your next tax bill. You can arrange a budget payment plan through your online account and decide how much you want to pay for each instalment.

Besides that, there are many ways to pay your tax bill directly. These include,

– Online or mobile banking 

– Clearing House Automated Payment System (CHAPS) 

– Debit or corporate (not personal) credit cards 

– With a bank transfer or a cheque



Penalties – Self-assessment Tax  

  • Late filing

If you submit the tax return after the deadline, you will have to face a late filing penalty. This will be applied automatically and could cost from £100 to £1,600 per year or more.

  • Late payment 

A late payment penalty is applied if you miss the deadline of the tax payment. The late filing could also lead to a late payment penalty. This process is automated. The fine is calculated by the amount of unpaid tax at the due date.

  • Failure to notify

Failure to notify HMRC is also considered a mistake with a penalty. This is a non-automated penalty system and is usually measured according to the amount of unpaid tax in the following year.

  • Inaccuracy

Making mistakes on the tax return or having inaccuracies will also lead to penalties followed by fines. The amount of the fine is calculated as a percentage of the unpaid personal tax as a result of the mistakes made.



What is short tax return?

Self-employed entrepreneurs, pensioners, and employees who make less than £85,000 are sent a short tax return (form SA200) with 4 pages. HMRC selects the recipients of the short tax return. But if your circumstances have changed in the last year, contact HMRC to check your eligibility for a short tax return. The short tax was introduced in 2005 to simplify the affairs of the taxpayers.



Self-assessment tax return deadlines

A self-assessment tax return is set according to your income for the last tax year. Keep those dates in mind so that you don’t have to worry about deadlines anymore. The tax year is from April 6th to April 5th next year. Deadlines of the self-assessment tax return of a given tax year are as follows,

  • October 5th. – First-time self-assessment tax registration deadline 
  • October 31st. – Deadline for the paper tax return 
  • January 31st. – Deadline of the online tax return. HMRC informs that submissions can be made up to February 28th without an immediate penalty.  
  • January 31st. – Deadline for the tax payment of the past year and any outstanding amount of the year before that.



What if I can’t pay the tax due?

If you are struggling to pay your tax bill for a valid reason, contactHMRC and explain your situation. 

They will look at,

  • Your income 
  • How much you owe
  • Expenditure
  • Assets
  • Savings and investments. 

After a thorough examination, they will decide on how to help you with your situation. They could extend your deadline or provide a payment proposal to pay it in instalments.

But if you are refusing to pay, HMRC is capable of taking law enforcement actions towards you. They can take what you owe by collecting your earnings, bank account, pension, or repossession.



Will I be sent a tax return?

A tax return will be sent to you if you belong to any of the following criteria.

  • Having untaxed income from overseas, property or an investment.
  • Earning capital gains above the exempt £12,300 amount in a given tax year.
  • Required to fill out a tax return last year
  • Pensioners who receive reduced age-related allowances



How to do self-assessment tax in 4 steps?

Now that we have talked about all the details of the self-assessment tax return, let’s summarize it all into 4 simple steps. Follow the steps as shown in our personal tax guide to have a much easier time in the self-assessment tax process.

Step 1- Pick your method.

Choose the method that is suited for you, either online tax return or paper tax return. 

Step 2-Collect the necessary information.

Keep the records of your accounts, invoices, and receipts or other records of income close by. National Insurance Number, your UTR number, P60 and or P45 forms, and records of your expenses will also be useful here.

Step 3- Fill in your self-assessment tax return.

Fill out the sections of the self-assessment tax return that are relevant to you. 

Step 4- Pay Self-assessment tax

All that is left when the above steps are completed is to pay your self-assessment tax bill on time.



How to find help

It is natural to feel paranoid when it comes to handling your money and paying your tax. This UK personal tax guide includes all the necessary steps needed. However, for more information, you can always use the following hotlines

  • Self-assessment tax helpline offered by HMRC (0845 900 0444) 
  • Online service help desk for technical guidance (0845 605 5999) 
  • HMRC Payment helpline for issues with paying your tax bill (0845 366 1204)

There is also an in-depth guide called “How to Fill Your Tax Return Guide (SA150)” published by the government with step-by-step notes on the process.

In conclusion, following the correct way when submitting the self-assessment tax return is vital for any taxpayer. It is highly recommended to let professionals take care of the tax process so you can be at peace of mind and avoid costly mistakes.

We here at  Philip Nolan accountants are reliable, professional accountants that are well versed in the field. Our accountants can  help you complete your self-assessment tax return accurately, free of hassle. Get in touch with us for more details.

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